Two of the most prominent liberals in the Senate have joined forces to take on the big banks as Sen. Bernie Sanders (I-VT) has announced that he is teaming up with Sen. Elizabeth Warren (D-MA) to co-sponsor her bill that would reinstate the Glass-Steagall Act.
In a statement, Sanders said:
I strongly support Sen. Elizabeth Warren’s bill to reinstate the Glass-Steagall Act.
On July 1, 1999, while Congress was voting on the Gramm-Leach-Bliley Act to permit commercial banks, investment banks and insurance companies to merge, then-Rep. Sanders said: “I believe this legislation, in its current form, will do more harm than good. It will lead to fewer banks and financial service providers; increased charges and fees for individual consumers and small businesses; diminished credit for rural America; and taxpayer exposure to potential losses should a financial conglomerate fail. It will lead to more mega-mergers; a small number of corporations dominating the financial service industry; and further concentration of economic power in our country.”
Allowing commercial banks to merge with investment banks and insurance companies in 1999 was a huge mistake. It precipitated the largest taxpayer bailout in the history of the world. It caused millions of Americans to lose their jobs, homes, life savings and ability to send their kids to college. It substantially increased wealth and income inequality and it led to the enormous concentration of economic power in this country.
I am proud to have led the fight in the House against repealing the Glass-Steagall Act in 1999. Sixteen years ago, I predicted that such a massive deregulation of the financial services industry would seriously harm the economy. I would give anything to have been proven wrong about this but unfortunately what happened seven years ago was even worse than I predicted.
Today, not only must we reinstate this important law, but if we are truly serious about ending too big to fail, we have got to break up the largest financial institutions in this country. If an institution is too big to fail, it is too big to exist.
The legislation to reinstate Glass-Steagall was introduced by Democratic Senators Warren and Cantwell (D-WA) along with Republican John McCain earlier this month. At the time, Warren said, “Despite the progress we’ve made since 2008, the biggest banks continue to threaten our economy. The biggest banks are collectively much larger than they were before the crisis, and they continue to engage in dangerous practices that could once again crash our economy. The 21st Century Glass-Steagall Act will rebuild the wall between commercial and investment banking and make our financial system more stable and secure.”
It is at this point that the obvious must be stated. Despite the support of McCain, Senate Republicans are going to squash this bill. However, the point of this legislation isn’t passage. Congressional liberals have quickly become experts as using their minority status to introduce publicly popular legislation that raises the profile of important issues while putting Republicans on the hot seat by forcing them to defend positions that place them in opposition to a majority of the public.
The judging of proposed legislation based on odds of passage promotes a myopic view that ignores long-term goals and the big picture. Liberals are trying to change the public discussion on issues like the big banks and financial reform, but to begin that conversation the public must have the opportunity to become aware and informed.
Republicans thrive when voters and constituents are uninformed.
The repeal of Glass-Steagall was signed into law by former President Clinton, who has continued to defend his deregulation. Glass-Steagall could be a thorny issue for Hillary Clinton on the Democratic primary campaign trail. The post-Great Recession era is not the go-go 90s. Senate liberals are fighting to keep the country from repeating the economic mistakes of the recent past.